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Issues involved: Whether the assessee concealed income and furnished inaccurate particulars u/s 271(1)(c) of the Income-tax Act, 1961.
Summary: The High Court of Allahabad considered a case where the Income-tax Appellate Tribunal referred a question regarding the concealment of income by the assessee. The assessee, a registered firm, had taken out government contracts and filed a return showing a net income of Rs. 24,814, which was revised later to disclose a higher rate of 6.5% on the contract money received. The Income Tax Officer (ITO) computed the total income at Rs. 3,42,780, including amounts deposited by partners during business. The assessee appealed, and the Gross Profit (G.P.) rate of 6.5% was accepted for contract income. However, an addition of Rs. 21,709 as income from unexplained cash credits was made. The matter was referred for penalty u/s 271(1)(c) due to the addition made by the ITO. The Income-tax Appellate Tribunal found that the assessee had not shown correct income in the original return and had not satisfactorily explained the revision to a higher G.P. rate. The Tribunal concluded that the assessee filed an inaccurate income return, justifying the penalty u/s 271(1)(c). Despite the cooperation shown by filing a revised return, the penalty was reduced. The Court considered the arguments presented by the assessee's counsel, citing previous court decisions. It was highlighted that the cash credit entries in the assessee's books were not satisfactorily explained, leading to the conclusion that they represented concealed income. The court emphasized the onus on the assessee to prove that the returns were not due to gross or wilful neglect, as per the Explanation added to u/s 271(1)(c). Relying on precedents and the material on record, the court upheld the penalty imposed, ruling in favor of the department and against the assessee. In conclusion, the court answered the question affirmatively in favor of the department, with no order as to costs.
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